Home > blog > Online killed the retail star

Online killed the retail star

Comments are Off

Last week the BNZ released its Online Retail Sales Index with news that was both frightening andexciting (depending on which side of the fence you sit on); online retailing grew at three times the rate of traditional bricks and mortar last quarter.

A flurry of related articles appeared to support the data – like this one about Brent Cooper from Jet in the NZ Herald. I’ve known the Coopers a very long time and I can tell you that they are extremely switched on – they’re excellent retailers. Yet, they have found the market shifts just too difficult to justify the expense of a ‘bricks and mortar’ retail outfit. Basically, online killed the retail star.

When you start to examine the numbers, you can see how it happened. Absolutely phenomenal figures are being reported – New Zealander’s spent nearly $2.8 billion dollars online last year alone (and 42% of that went to off shore websites). “Show-rooming” is a real thing – I’ve seen it in action.

With online shopping up 13% in the last quarter (compared to the same period, year previously), there’s now absolutely no doubt that people are rapidly shifting to online from bricks and mortar. As it was reported and suggested, unless you are a very well known “chain” store (check out the excitement around an impending Zara to NZ in this post), you’re going to struggle to remain relevant – even in a mall with a huge amount of foot traffic.

The message is clear – you must build your online business. This is no longer solely about marketing your brand; this is about a fundamental shift in consumer behaviour. Recently I was invited to speak to the global CEO’s of a very large NZ business, who for years have operated under a “make product, advertise it on TV, get sales, make next product” business cycle. My message to them was, “the new world order suggests that your model will not work for much longer”. Consumers have become incredibly savvy, they are looking to get more bang for their back. Entrepreneurial and challenger brands understand this and are capitalising on it by also being relevant and interesting in a socially led world.

But hey, don’t be up and arms about “bargain hunters”. This isn’t about the ‘cheap’ set of people who don’t value quality – it’s not that at all. In fact, the trends are shifting away from “deals”, and into value. That’s where we’ve been successful at Flossie.com – we don’t focus on a ‘daily deal’ approach, in fact we avoid it. It’s about how do we ensure our customer gets the best value for their money. Value to them means the best service, the best treatment and outcome (of where they feel great, for the best price). They understand inherently that if you pay peanuts, you’ll get monkeys – but they also know that they have more bargaining power than ever before. Where once they were told ‘you need to book weeks in advance’, they now have choice and can opt for last minute. This suits today’s lifestyle.

As a service based business you’re not excluded from any of this. The choices people are making online include booking with your business. 86%* of all purchases made are being researched and decided in the online world. So even if you do operate a traditional ‘bricks and mortar’ operation, your ability to put ‘bums on seats’ is utterly down to your ability to market & sell yourself online. How easily accessible are you? How are you positioning yourself to get some of the $2.8 billion in online sales?

Let’s take a closer look at what’s going to be happening in the online service market.

Right now you’ll find that a lot of emphasis has been placed around online retailing of physical products (clothing has experienced massive growth). We predict the next “mega trend” will be in driving services to be booked via online. Once the domain of just hotels and travel, the channels we’ll see pushing us to commit and pay for their services online (before heading to their physical location) will include hair, beauty, medical, fitness, mechanical…pretty much, anyone who sells time.

The tools to help you sell yourself online are already here (most of the salon software systems have now gone ‘cloud’), but now the emphasis will be in trying to connect the dots. Creating customer funnels for the bookings – and more importantly re-bookings. Bringing customers towards your business when they’re interested – having a handle on what they need, when they need it and how you can deliver it. Making life easier for your customer.

Some savvy salons have their heads around this. But for most it’s a minefield of seemingly overwhelming tech jargon wrapped up in a frightening moment of ‘where the hell will I find time to do this’. Some are just throwing their hands in the air and choosing to rely on existing customers to book and come back when they’re ready. Hey, they’ve known you for years. You provide them with a service that is exemplary and you’re comfortable that the loyalty will be two way.

Sadly, we remain unconvinced that the approach will work in the long term. And that’s no slight on output or quality – but a reality of the convenience factor required of service based businesses today.

We polled 350 women recently and the results were staggering and eye opening. Yes, they will shop around – but only because they want a bit of everything and they want it NOW. They’re not ‘bargain hunting’ – they’re ‘value hunting’. They want to buy nice wine, go out for dinner, wear new shoes, get new season clothing, have their hair done, drive a nice car, go on holiday, buy good food, treat the kids…. do you see the pattern here? There are so many things fighting for a share of the wallet and unless you’re earning $220k a year, something has to give. And, I don’t know about you, but I’m not okay with missing out. I want it all. I have “more” tattooed on my wrist.

Salons, spas and beauty therapy clinics are traditional ‘bricks and mortar’ retail businesses. But the way those businesses used to perform (build up client base, retain them) has changed. Customers are driven by instant gratification. That doesn’t make them awful, undesirable or ungrateful – it makes them busy, time-poor human beings who are trying to juggle a full life. They prioritise what’s important and unless you can fit in with their lifestyle, you won’t make the cut.

It’s understandable that it’s overwhelming. But we are here to help – it’s what we do at Flossie.com – make online marketing of hair and beauty service businesses super easy. Talk to us about how we can help do this for you.


BNZ Online Retail Sales Index

*nzgirl.co.nz insights monitor, October 2013